Leonardo S.p.a. Just Missed Earnings - But Analysts Have Updated Their Models

Leonardo S.p.a. (BIT:LDO) came out with its half-yearly results last week, and we wanted to see how the business is performing and what industry forecasters think of the company following this report. Results overall were not great, with earnings of €0.14 per share falling drastically short of analyst expectations. Meanwhile revenues hit €8.0b and were slightly better than forecasts. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

Check out our latest analysis for Leonardo

Taking into account the latest results, the consensus forecast from Leonardo's 15 analysts is for revenues of €16.8b in 2024. This reflects a satisfactory 2.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are forecast to sink 17% to €1.42 in the same period. Before this earnings report, the analysts had been forecasting revenues of €16.7b and earnings per share (EPS) of €1.34 in 2024. So the consensus seems to have become somewhat more optimistic on Leonardo's earnings potential following these results.

There's been no major changes to the consensus price target of €25.09, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. Fixating on a single price target can be unwise though, since the consensus target is effectively the average of analyst price targets. As a result, some investors like to look at the range of estimates to see if there are any diverging opinions on the company's valuation. There are some variant perceptions on Leonardo, with the most bullish analyst valuing it at €30.00 and the most bearish at €16.00 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. The analysts are definitely expecting Leonardo's growth to accelerate, with the forecast 4.7% annualised growth to the end of 2024 ranking favourably alongside historical growth of 3.9% per annum over the past five years. Other similar companies in the industry (with analyst coverage) are also forecast to grow their revenue at 5.6% per year. Factoring in the forecast acceleration in revenue, it's pretty clear that Leonardo is expected to grow at about the same rate as the wider industry.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Leonardo's earnings potential next year. They also reconfirmed their revenue estimates, with the company predicted to grow at about the same rate as the wider industry. The consensus price target held steady at €25.09, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Leonardo. Long-term earnings power is much more important than next year's profits. We have forecasts for Leonardo going out to 2026, and you can see them free on our platform here.

It might also be worth considering whether Leonardo's debt load is appropriate, using our debt analysis tools on the Simply Wall St platform, here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com